Key Takeaways:
Sandisk Inc. (SNDK) shares surged 12 percent to close at $1,406.32 on Tuesday, pushing the memory-chip maker’s market capitalization over $200 billion for the first time as insatiable demand for artificial intelligence hardware continues to ripple through the semiconductor sector.
"The commitments allow for long-term stability, as lower cyclicality will lead to attractive economics over a longer horizon rather than just for one quarter," Bernstein analyst Mark Newman said, raising the firm's price target on Sandisk to $1,700 from $1,250.
The stock's ascent gives Sandisk a market value of $208.26 billion, a stunning 2,794 percent increase since it was spun off from Western Digital (WDC) in February 2025. The rally, which includes a 492 percent gain in 2026 alone, has been fueled by accelerating sales of high-speed storage chips, a critical component for the data centers being built by cloud giants like Amazon.com, Microsoft, and Alphabet. Sandisk’s fiscal third-quarter revenue, reported April 30, jumped 251 percent year-over-year to just under $6 billion, a faster growth rate than the 196 percent reported by its larger competitor, Micron Technology (MU).
The AI-driven boom is rewriting the script for the notoriously cyclical memory industry, where prices have historically swung based on supply and demand. With tech companies projected to spend over $700 billion on new AI data centers this year and new memory production capacity not expected until mid-2027, the resulting supply shortage is expected to keep prices elevated. This dynamic could support higher, more stable earnings for memory suppliers, a sharp break from their past.
In a significant strategic shift, Sandisk is moving away from the volatile spot market and toward "multiyear customer engagements backed by firm financial commitments." The company announced it secured three such agreements in the March quarter, representing a minimum value of $42 billion, and has already signed two more in the current quarter.
This new model provides greater revenue and earnings visibility, a feature that investors typically reward with a higher valuation multiple. While Sandisk currently trades at 43 times trailing earnings, that multiple drops to 19 based on forward estimates. This compares favorably to Micron, which trades at 27 times trailing earnings and less than six times forward projections, though Micron is a much larger company with a market cap of over $650 billion.
The rally has also seen Sandisk, the spinoff, eclipse the market value of its former parent. Western Digital, which focuses on hard-disk drives (HDDs), closed Tuesday with a market capitalization of $160.37 billion. While WDC has also benefited from AI demand, its 849 percent gain since the separation pales in comparison to Sandisk's meteoric rise, highlighting the market's intense focus on the flash memory technology at the heart of the AI buildout.
Both stocks face risks from their rapid appreciation and the potential for an eventual cooling of memory prices. However, with a strategic shift toward enterprise customers and long-term contracts, Sandisk is positioning itself to mitigate the boom-and-bust cycles of the past.
This article is for informational purposes only and does not constitute investment advice.
